Current Risk Management Position In India

The risk management function is set to become increasingly important over the next decade where shareholders will look to add value to their business and protect customers

This article covers the current risk management position in India and looks into the future from an opportunities’ point of view in the area of risk management. Key points discussed in the article are drivers of risk management, current corporate governance practices, challenges in the implementation of risk management and emerging future opportunities. The article looks into the present risk management position and advocates that there are plenty of opportunities in this field in time to come.

Corporate Governance Guidelines

Human existence is fraught with future uncertainties and managing the same in your own way is not something new, however, in recent times, with successive failure of businesses across the globe, there is greater focus on management of risk. The series of changes made to corporate governance guidelines across the globe is a testimony of the seriousness shown by different regulatory authorities. Some of the recent changes brought up by regulatory authorities across the globe are risk-based capital provision in the banking and insurance sector. The focus of different regulatory bodies has increased on setting up of Risk Management Committees and strengthening the role of these committees in providing risk oversight. It has been realized that risks cannot be eliminated but can only be managed, so their identification is a key step in the process of risk management. The recent changes in corporate governance guidelines made in Indian financial institutions are as follows:

• IRDA (Insurance Regulatory and Development Authority) - 2016 Corporate Governance Guidelines are sharper and have described the objectives of risk management committee. The guidelines also state that certain positions cannot be helped by the same individual due to conflict of interest.

• Reserve Bank of India - governs the risk management activities for Indian Banks.